For over a year now the Irish insurance industry has been spinning dramatic price hikes in car insurance as being the result of claims – those awful people injured in car accidents who dared to claim against insurance are the fault, along of course with their lawyers.

One spin in particular, though, will not die: the suggestion that there was a huge jump in court injury awards from 2013 – 2015. On RTÉ’s Nine News last night (5 October 2016, from 1:43) Kevin Thompson, CEO of Insurance Ireland, made the claim again:

We’ve also seen a 33% increase in the level of awards in the Circuit Court from 2013 – 2015.

This is amazing. Injury awards suddenly up by one third! But this claim, often made by insurance industry spokespeople, raises two obvious questions: (1) why did this happen in the Circuit Court?; and (2) what happened between 2013 and 2015?

The District and Circuit Courts have upper limits on the compensation they can award and until 2014, when the law took effect, the maximum the Circuit Court could award was €38,092.14. That odd figure is £30,000 in old money, hinting that the limit had not been changed in a very long time. In fact, since the late 1990s many argued for an increase in jurisdiction for the District and Circuit Courts to address inflation and the changing nature of litigation. In 2010 I wrote that such a change was long overdue and would help to reduce legal costs. The government had introduced a law in 2002 to allow them to change jurisdiction limits but failed to do so, partly due to insurance industry lobbying.

Increasing the jurisdiction of the lower courts allows them to hear a range of cases that they are more than capable of dealing with, at a lower cost. So, increasing court jurisdiction limits should reduce legal costs.

The increase in Circuit Court jurisdiction in 2014 raised maximum personal injury awards by that court by €21,907.86 – around 57%. This is a significant increase and one which has an immediate impact on statistics, particularly average awards. There is no reason that a Circuit Court judge would award more than a High Court judge in a particular case, so there should be no award inflation. But the average Circuit Court injuries award will naturally increase. Likewise, at High Court level, the average award increases because the lower value awards up to €60,000 are taken out.

So, it is not at all surprising that there was an increase in Circuit Court compensation levels from 2013 to 2015 – the jurisdiction level increased 57% but the average award only 33%. Average award levels limited to one court jurisdiction are of little use in considering the overall levels of compensation awarded or general claims activity.

What the insurance industry does not say, and cannot say, is that this 33% was a result of overall compensation inflation.

The insurance industry is taking advantage of the current interregnum to step up its media campaign against paying compensation to injured parties. This is a concerted campaign with almost daily media reports of the damage allegedly high compensation levels and legal costs are doing to the insurance industry, the economy and even Ireland’s foreign direct investment. It appears to be working, despite all evidence suggesting that other factors are causing premiums to increase.

Since 2011 insurance costs have risen by 30 per cent, the association said, with a large part of the jump occurring within the past 12 months.

What you won’t find anywhere, however, is evidence to suggest that this huge hike in premiums has been caused by compensation, or how “compensation culture” is “out of control”. On the contrary, all indications are that the main reasons for insurance increases have nothing to do with compensation. Industry spin is having the desired effect, however, with even Minister for Jobs, Enterprise and Innovation appearing recently to come around to the industry point of view.

I recently requested documents from the Department of Jobs, Enterprise and Innovation on representations by the insurance industry and in the documents released were records relating to two industry meetings where the Minister was lobbied on insurance costs.

The first meeting was with executives from Axa and was requested through Fine Gael Councillor Anthony Lavin, who is also a customer care manager with Axa. It took place on 8 October 2015. A further meeting took place with Insurance Ireland, the industry body, and was arranged through PR consultants.

The Minister’s briefing materials included a National Competitiveness Council report on insurance costs. Recent newspaper articles have referred to this report and its reference to legal costs supposedly being “sticky”, but generally do not point out other important aspects of the report.

The industry frequently says motor claim awards are too high but “64% of PIAB [Injuires Board] awards for motor injury claims are for <€20,000 … the cost of processing a claim through the PIAB is at historically low levels”.

The review of the book of quantum “could result in higher costs, and ultimately higher premiums.”

Legal costs “proved extremely sticky” apart from “a brief period in 2013”. The evidence for these comments is not referred to.

Minutes of the meeting record that the Minister made a number of counter arguments to Axa on compensation concerns, for example that medical negligence cases skewed comparisons of compensation payments and that the level of awards by PIAB was “fairly consistent” from 2010-2014, with the majority of awards being under €20,000. He said it would be helpful if the industry provided more information on “untracked cases”. These are mostly cases that are settled between claimants and insurers with the result that the State agencies do not learn what the outcome is.

Given that Axa and the industry are seeking a number of reforms that would require them to be given more statistical information by PIAB and the Courts Service, it is peculiar that the industry continues to be remarkably reticent on providing details on untracked cases. The note of this meeting states that Axa agreed to “work with Insurance Ireland with a view to supplying” this type of data.

Axa appeared to focus on what were effectively four case studies of recent court cases where the awards exceeded what the insurers had valued the cases at. Axa were not, in fact, the insurer in any of these cases. A limited number of court awards are not, of course, representative of most claims and indeed the note of the meeting between the Minister and Insurance Ireland on 6 November 2015 stats that about 20% of claims go to PIAB, of which about 40% are rejected and settled and “[a] small number of cases are finalised by the Courts.”

Axa, along with many other parties, has made submissions to DJEI on the operation and implementation of the PIAB legislation, which has been ongoing for some time. A significant suggestion is that the limitation period for personal injury claims be reduced to one year (at the moment the limitation period is two years). This proposal was already considered when the legislation was introduce to establish PIAB and the government decided against a one year limitation period.

It was felt at the time that such a short limitation period would exclude many valid claims or that it would drive people into dealing with lawyers and claims at a time when they might still be receiving treatment or in recovery. A one year limitation period would be extraordinarily restrictive, its only aim and affect being to reduce the liabilities of insurance companies by excluding valid, genuine claims.

A further surprising proposal is to allow PIAB to award “some form of Legal fees to lawyers that will allow for a higher acceptance rate of awards.” The insurance industry’s objective in having PIAB established was to drive a wedge between injured parties and solicitors, who might provide claimants with independent, expert advice. This was to be achieved by the law providing that no legal fees would be awarded by PIAB (except in limited situations, and even then in very small amounts). The industry repeatedly claims that, despite PIAB being intended to be a “lawyer free zone”, over 90% of claimants are represented by solicitors (again no evidence is publicly available to support this claim). Axa’s proposal appears to accept that the right of people to seek professional representation is still exercised in most cases, despite the cost implication at present.

The above documents and some others are available here on Scribd. They suggest that government departments and the National Competitive Council do not necessarily share the views of the industry and are aware of other factors affecting the insurance industry.

The bulk of media reporting and commentary on insurance premium hikes remains focused on and obsessed with compensation, with little being said or asked about Solvency II, RSA, FBD and other industry-specific issues.

Rarely a week goes by without more insurance industry spin on personal injury claims, particularly whiplash claims. The industry now takes any opportunity to blame personal injury claims for their woes, even in the face of facts which indicate other causes.

Inevitably, the Irish insurance industry is seeking reforms similar to those announced late last year in the UK, including a ban on claims for “minor” whiplash injuries.

Ireland should follow the UK’s lead in considering a ban on whiplash, to flush out fraudulent claims. The UK is considering a position whereby whiplash victims would have their medical expenses and loss of earnings compensated by insurers in a move that it believes could save the sector £1 billion a year and reduce premium costs.

Mr O’Rourke does not go into detail about why a whole category of claim should be banned to weed out the supposed problem of fraudulent claims, but the insurance industry often suggests that all whiplash claims are effectively fraudulent. This is in spite of long-standing medical evidence and opinion. A call for a ban on whiplash claim won’t go far in Ireland, where it would likely be unconstitutional, but other reforms will be demanded. Indeed, it appears AIG has a wishlist of things it would like an Irish government to do, quite a turn-around for a company that had to go cap in hand to the Federal Reserve in 2008 to avoid oblivion. More recently, its Irish operations benefitted from assistance from the Irish taxpayer. One might be inclined to wonder whether any losses or difficulties at AIG could have causes beyond the cost of claims.

Yesterday, Fiona Muldoon of FBD was a guest on Morning Ireland, taking another opportunity to bemoan the cost of claims and the legal system despite FBD’s results telling a different story. FBD has quite reasonably been described as “beleaguered” and has suffered from a range of difficulties which have nothing to do with personal injury claims.

The Times (Ireland edition) covered FBD’s latest results with the headline “Insurance sector too competitive, FBD says” [paywalled]. While the real problem for the industry is in the headline, the article nevertheless begins:

Over-inflated whiplash claims and too much competition between insurers were among the many factors to blame for FBD’s loss-making performance this year, its chief executive said.

The cost of allegedly “over-inflated” whiplash claims is a crutch that the industry repeatedly leans on when in difficulty, while the truth for FBD is that:

Most of last year’s losses stemmed from measures to bolster its capital reserves and €11 million in restructuring costs.

The article also points out that FBD experienced a 9% fall in premium volumes last year – ie. they lost customers. Ms Muldoon continues:

A number of factors had made the Irish insurance sector unprofitable between 2012 and 2014, including too much competition driving down premiums, Ms Muldoon said. “The market in Ireland is very fractured, which meant that companies were competing aggressively against each other and in hindsight they were not charging enough.”

So. Insurance companies have had financial difficulties because they have had to bolster reserves, lost customers and have not charged enough for years. But ask any spokesperson for the insurers about their problems and it’s not long before the cost of claims is front and centre.

This is a remarkable feature of articles on the insurance industry in Ireland over the past year: reports on financial results cover these internal difficulties and challenges faced by the industry which are obviously having a negative impact on premiums. Figures are available to explain the impact on insurers but not, it seems, to explain their complaints about the cost of claims and the legal system.

The reality is that the industry does not have any statistics or figures about personal injury claims that it is willing to make public. Even the Injuries Board, effectively a creature of the industry, has criticised the failure to support allegations about claims, as well as their failure to explain where there premium income is going. The number of personal injury court claims fell in 2014 and the Injuries Board has highlighted that there is a €1 billion difference between the premium income of Irish insurers and published awards.

It’s time for insurers to accept that, this time around, their losses are down to themselves and not due to paying out on claims (which is, of course, what they exist to do).

I wrote in May about the problems which have arisen for third parties claiming against Setanta, which is now in liquidation. A strange series of events unfolded which involved the Minister for Finance, who is not responsible for the Motor Insurers’ Bureau of Ireland, stating in the Dáil that the MIBI had “indicated” that they would cover third party Setanta claims.

The Minister gave no detail and did not say who the MIBI had given this indication to. The Irish Brokers Association circulated a briefing paper to its members which, in 6 pages, said effectively the same thing as the Minister for Finance but which appears to have been based on the assurance given by him in the Dáil.

The Minister for Transport, who is responsible for the MIBI, was more cautious and directed queries to that organisation. I wrote to the Minister for Transport for clarity on the situation and he informed me last month that the MIBI was taking legal advice on its liability in this situation. However, it was clear that they did not believe they had a liability. The Minister said:

I understand that the MIBI considers that it has no liability in instances where an alleged offending vehicle was insured at the time of the accident and that it has never previously been involved when a valid policy of insurance was in place.

The MIBI has now obtained the legal advice which supports this position:

the MIBI Agreement (2009) does not require the MIBI to satisfy awards against drivers covered by a policy of insurance where the insurer is unable to pay all or part of an award due to insolvency.

That clarifies the MIBI’s position but it does not mean that the position is correct. Importantly, it leaves third party claimants pursing claims against a liquidator in the eventual hope of being paid in full, which is unlikely, or claiming against the Insurance Compensation Fund, which is subject to a cap of 65% of the value of the claim or €825,000 (whichever is lower). Of course, the MIBI’s position is based on its own opinion and legal advice and it remains to be seen whether any injured party will challenge that position.

In the meantime, three serious questions remain:

What was the Minister for Finance talking about when he told the Dáil in May that the MIBI had indicated it would cover claims against Setanta?

What does section 4.1.1 of the MIBI Agreement mean when it says that if a judgment is obtained for damages that should be covered by insurance but which isn’t paid within 28 days, the MIBI will pay it “whether or not [it is] in fact covered by an approved policy of insurance” and how does this accord with the MIBI’s legal advice? Does it not, along with clause 4.4, envisage paying out on claims such as those brought against an insolvent insurer or one who refuses to pay?

What is the Government going to do to assist third parties who might now lose out on a significant portion of their compensation through no fault of their own and due to events entirely outside of their control?

The collapse of Setanta Insurance is not just a shambles for policyholders. They, at least, could arrange new insurance and at worst lost only the unexpired value of their policy. But what about someone injured in a road traffic accident cause by a Setanta policyholder?

The situation remains murky. Information available from the Central Bank and other sources initially referred to the Irish Insurance Compensation Fund. Calling on the ICF for all claims involving Setanta would put further pressure on the Fund but also be significantly unfair to injured parties, as it only pays out 65% of a claim or €825,000 (whichever is lower). For example: a claimant for €1.5 million would only get €825,000 from the ICF; a claimant for €100,000 would only get €65,000.

In the aftermath of the news solicitors obviously reviewed their personal injury files for claims against Setanta and, in the case of such claims, look for another source of cover. The prospect of involving the Motor Insurers’ Bureau of Ireland immediately arose. The gut response is that MIBI was set up to cover claims against uninsured or untraced drivers, whereas the ICF was set up to cover insolvent insurers. Surely a claim against Setanta “belongs” with the ICF?

The MIBI agreement is poorly worded at the best of times but in this situation perhaps for the better. The agreement says that if an award which should be covered by an approved policy of insurance is not paid in full within 28 days then, whether or not insurance actually was in place, MIBI will pay it. This interpretation is supported by guidance from Insurance Ireland, the industry body, which says that awards not honoured by Setanta should be referred to MIBI who would pay out and seek to recoup funds in Malta, where Setanta is regulated.

The Motor Insurance Bureau of Ireland [sic] (“MIBI”) have indicated that they intend to accept all third party claims in connection to Setanta policies.

The minister responsible for the agreement with MIBI is the Minister for Transport. The Department of Transport has not had much to say about Setanta to date but the Minister for Transport was asked in the Dáil on 8 May 2014 how MIBI would handle Setanta claims. He responded:

The arrangement MIBI puts in place for dealing with the Setanta claims is a matter for the MIBI itself under the terms of the Agreement. I will arrange for the Deputy’s question to be forwarded to the MIBI for them to respond directly to her.

This does not go so far as confirming that MIBI will, in fact, be covering Setanta claims. The question asked of him is important because when a claim arises from an uninsured driver MIBI is sued alongside the defendant (or as the sole defendant if the driver is untraced), whereas the obligation to pay out on foot of an award which has not been honoured by an insurance company is different. There are likely to be a number of cases where a claimant has already sued the other driver but might now be statute barred as against MIBI, if required to join them. However, in that situation one would assume that MIBI should not necessarily be sued as a co-defendant. But the Law Society advises that claims against Setanta be notified to MIBI in the same manner as uninsured/untraced driver cases. This would involve MIBI being sued alongside the driver.

The Irish Brokers Association got a legal opinion on the situation but really it goes no further than to summarise the ICF and MIBI regimes and state that “recent Dáil comments indicate the MIBI scheme may be available in the context of Setanta.”

What has been the response of MIBI to such notifications? I received my first this morning.

Paul Merceica has recently been appointed as liquidator of [Setanta Insurance] and will be responsible for the administration of the Company’s assets and liabilities … You may also wish to refer to the website of the Malta Financial Services Authority for further information …

This is an update about the liquidation of Setanta Insurance, not about how MIBI will deal with Setanta claims made against it. [As an aside: good luck trying to get a substantive response from the Setanta contact centre.] The only relevant response was as follows:

At this point we cannot confirm our position.

Accordingly, how can it be said with certainty that MIBI will voluntarily meet Setanta third party claims? And who is in charge?

In relation to the wider problem with Setanta, David Murphy has a great post on the RTÉ Business blog which highlights a significant fact:

The Central Bank became aware that there were problems in Setanta late last year, it was still permitted to sell insurance policies until it the end of 2013 and went bust last month.

While a customer of Setanta with the foresight to see the writing on the wall had the option of switching cover before the appointment of a liquidator and getting a refund of part of their policy, someone with a claim against Setanta had whether or not they got their money out largely depend on lucky timing.

A few years ago there were concerns, which sometimes resurface, that the Courts Service might close the District Court in Newcastle West and transfer its sittings elsewhere. The only logical venue would be Limerick city, which would raise a number of problems for the Courts Service, lawyers and their clients.

It appears unlikely, at least for now, and in the past year some areas have been added to the Newcastle West district. Court sittings have also been reorganised. Other districts have not been so lucky and have lost out on their local court house.

The West Cork District Court area extends from Kinsale westwards as far as Castletownbere. In recent years, there has already been seven local courts closed by the Courts Service in the West Cork area, the most recent being Kinsale District Court which sat for the last time on December 19.

The West Cork Bar Association issued a statement yesterday saying solicitors were concerned court closures were seriously eroding access to justice for people living in the region. The organisation said that if more closures were allowed to proceed, the people of West Cork would face travelling long distances to Cork City to deal with district court matters, when under the Constitution, the State has to provide courts of local and limited jurisdiction.

Solicitors pointed out that vulnerable citizens, who require the urgent assistance of the district court, such as in a domestic violence situation, will find it much more difficult to access the help and protection they need.

I mentioned previously a High Court judgment which dismissed a challenge brought by solicitors in New Ross area against the temporary relocation of court sittings to Ardcavan. The challenge was on public interest grounds and on the basis that the move threatened the applicant’s right to earn a living.

I accept that as solicitors practising in the relevant area they have a strong interest in the decision sought to be quashed both in their own and their clients interest. The question is fairly posed “if they do not have locus standi – who does?” The fact their interest coincides with the public interest does not, it seems to me, alter anything. In my view, the applicants have the requisite locus standi to challenge the decision made.

However, in the New Ross case the transfer was originally intended to be temporary due to an “urgent need” where the courthouse was “unsafe or otherwise unusable” and therefore the challenge was dismissed. Mr Justice Hedigan’s decision obviously leaves the wider questions open:

is a court closure an attack on the constitutional right of local solicitors to earn a living; and

is a court closure an attack on the constitutional right of citizens to have access to justice?

[Updated 6/2/14] The most high-profile white collar crime trial in the history of the State got underway today. This post in not about that case, but rather the impact of social media on court proceedings and reporting. Previously, when the jury for that trial was being selected and sworn in, Judge Martin Nolan made a number of interesting comments which hint at the impact social media and the internet can have on court proceedings.

[Judge Nolan] told the panel that it is unrealistic to expect them not to have heard of Anglo but said that anyone who has expressed strong views in public should not sit on the jury.

He said that this includes views expressed on the Internet, including Facebook. Judge Nolan said it would be embarrassing for the jurors if it emerged during the trial that they had expressed views on Anglo on such “permanent forums.”

Once the jury had been selected, he warned jurors that they “should not conduct their own investigations into the case or even read up on it. He said he will regard such activity as a breach of the jurors’ oaths.”

The risk that a juror would engage in independent research is not new but it is heightened by social media and the availability of information online.For example, a university lecturer in the UK was jailed for three months in 2012 for researching a defendant online and sharing her findings with the jury.

It is obvious from the comments of Judge Nolan that the Irish judiciary is alert to the risks. With smartphones in every pocket an array of research resources are available to everyone to an extent unimaginable fifteen years ago. The temptation for a juror to google the accused over lunch could be considerable. [In fact, the issue has already arisen: last year a criminal trial in Cork collapsed when the jury foreman informed the judge hearing the case that a juror had learned of information concerned the accused on Facebook and had discussed it with fellow jurors. Judge Ó Donnabháin warned the juror that she could be facing contempt of court proceedings and granted her legal aid in order to engage a solicitor.]

Research by jurors is an issue which the Law Reform Commission has already considered, in their 2013 Report on Jury Service.

The advent of the internet and social media sites, and in particular their ready accessibility through smart phones or Wi-Fi enabled tablets, now provide access to a wide range of materials such as archives of media reports that may have reported on the factual background to a trial, general information on scientific matters that might arise in a trial (such as DNA evidence) and a huge array of general commentary such as blogs and other material from social media. This information can contain prejudicial material, and has the potential to impact on the right to a fair trial. In recent years, trial judges have incorporated specific comments to the jury not to access information regarding the trial through internet search engines or social media.

The Commission recommended that specific reform was needed to deal with juror misconduct in carrying out “extraneous investigations” using the internet and social media. Their report includes a draft Juries Bill 2013 which includes, in section 39, an offence of making inquiries about the accused or any other matters relevant to the trial. “Making an inquiry” is defined as including “conducting any research, for example, by searching an electronic database for information (such as by using the internet), viewing or inspecting any place or object, conducting an experiment or causing someone else to make an inquiry.”

The proposed penalty, however, is a Class B fine on summary conviction – currently a maximum of €4,000. Under the existing law, referred to by Judge Nolan, such research could be a breach of the juror’s oath and result in a finding that they are in contempt of court. Such a finding could lead to a prison sentence, as has happened in the UK. I suspect that the proposal by the LRC is intended to highlight the issue for jurors and while the draft Bill is only a suggestion, one would think that a stronger maximum penalty is warranted.

Inappropriate contact between parties to proceedings is another risk, referred to by Gerry Curran in the Courts Service News in 2012.

Examples of flagrant abuse of this exist [internationally], including the appearance of disparaging remarks about other jurors on social media sites and jurors ‘friending’ each other on Facebook, trying to ‘friend’ counsel for either side and even ‘friending’ defendants in cases they were serving on.

This might appear unlikely to some readers but anyone who has maintained social media accounts for a few years is likely to have received more than one unexpected friend request. Juries already get warnings about discussing cases, but Judges may have to spell things out for jurors. According to Curran:

“[Studies suggest] that the magnitude of social change caused by social media requires the judge to adopt additional specificity when giving instructions. Brand names of social media need to be used as people are so used to using them as an extension of thought. It is also important to emphasis the fair trial element of the instruction – as the same familiarity might well cause a feeling in the juror of giving up a personal freedom in not communicating.

As if the courts don’t have enough on their plate worrying about the conduct of juries, court orders can of course be broken by members of the public. In the UK in 2013 two men received suspended sentences for posting photographs allegedly showing the now-adult killers of James Bulger, in breach of an injunction, on Facebook and Twitter (AG v. Harkins & Liddle [2013] EWHC 1455 (Admin)). That decision shows the relative speed and success with which the UK authorities have kept on top of the issue and no doubt will act as a deterrent in future.

Whatever about jurors, journalists have certainly taken to social media and many provide interesting updates in between various court hearings. [In fact, the Irish Times is liveblogging the Anglo trial.] Curran notes the risks:

Live ‘tweeting’ is akin to broadcast – it is sent with no delay, there is no taking it back, and no limits to dissemination. But what if soon after a courtroom tweet a judge rules something inadmissible, or to be ignored by the jury, or is patently shown to be a lie? In the UK guidelines effectively limit the use of Twitter to accredited media, who apply to do so and who, of course, are familiar with the court process and the consequences of endangering same.

Again, these risks are not necessarily new: a journalist might deliver an update on radio news during a lunchtime broadcast which includes material which might later be ruled on by the presiding judge. Journalists, of course, have expertise in dealing with court reporting and generally are sensitive to what should and should not be reported depending on the stage the case has reached.

Nevertheless, recent developments certainly suggest an aversion to live tweeting or “contemporaneous reporting”. In the high profile surrogacy guardianship case (M.R & Anor v. An tArd Chlaraitheoir & Ors [2013] IEHC 91), the appeal of which is currently being heard by the Supreme Court, Mr Justice Abbott directed that the case be heard otherwise than in public but that certain journalists be allowed to attend and report on the hearings subject to a number of conditions, including that “no contemporaneous social media reporting e.g. by Twitter shall be carried out”. [I am not sure how the Irish Times liveblog of the Anglo trial is maintained but such a blog could constitute contemporaneous social media reporting.]

Similarly, family law proceedings have now been opened up to the media who can report cases so long as the parties are not identified. New guidelines on reporting of such cases prohibit live-tweeting (although the Courts and Civil Law (Miscellaneous Provisions) Act 2013 do not contain the prohibition). Those guidelines appear to have been circulated to judges but not, to my knowledge to date, to lawyers and they don’t appear to be available on the websites of the Minister for Justice or the Courts Service.

As with many areas of the law, it is enforcement rather than any new measures themselves that will be interesting. Recent experience in the UK is of effective detection and prosecution of offences followed by serious penalties. The Anglo trial, which will last for months and be of intense media interest, may provide the first real test for the Irish court system in dealing with these dangers.